Altcoins
Bitcoin Dominance Rate Meets Familiar Resistance, Hints at Coming “Altcoin Season”
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The rise of bitcoins (BTC) dominance rateor the largest cryptocurrency share in the overall crypto market, has halted, hinting at the potential outperformance of alternative tokens known as altcoins to come.
Altcoins are any cryptocurrency other than Bitcoin.
Data from TradingView shows that Bitcoin’s dominance rate increased from 42% to 48% in the first quarter and has struggled to surpass that level so far this month.
The metric has hovered between 38% and 48% for nearly two years, with declines from 46% to 48% coinciding with outsized gains in altcoins.
“Bitcoin dominance could be peaking, this would indicate that altcoins would outperform,” Markus Thielen, head of research and strategy at crypto services provider Matrixport, said in a note to clients on Thursday.
Previous drops in Bitcoin’s dominance rate of 48% coincided with the altcoin market boom. (CoinDesk/TradingView)
The chart shows that the total market capitalization of altcoins (white line, blue arrows) increased by over 60% to $1.39 trillion in the two months after BTC’s dominance rate declined from 48% in July 2021. Similar bearish reversals in dominance rate. in mid-October 2021 and June 2022, altcoin valuations also pushed higher.
History could repeat itself, according to Thielen.
“Bitcoin dominance appears to peak at levels similar to 2022 – accounting for 45/46% of the total crypto market capitalization,” Thielen said. “For Bitcoin to continue to outperform the rest of the ecosystem, it would imply that only Bitcoin matters, which seems unlikely given the intellectual and financial firepower deployed on other chains.
“Bitcoin has benefited from US liquidity, but in the future this could change,” he said.